Brexit Initial Views

June 24, 2016

The public have voted and we woke this morning to the news that Britain will leave the European Union. Irrespective of the way any of us voted, that is a fact and we can now only look to the present and the future, and not at the past.

We will have to make the most of the opportunities that arise, and face the many uncertainties and challenges that will appear as our leaders negotiate our exit.

The overriding message to our clients and friends is that business and life continues as normal.

There will be no immediate changes to any legislation so as things currently stand, no impact on accounting, tax or business regulations.

Two major impacts revolve around personal investments and VAT.

With today’s market volatilities, our sister company Cavendish Ware who are FCA regulated wealth managers and financial advisers have produced a briefing that can be accessed here. The fundamental advice from them is not to panic and sell investments, but to let the dust settle over the next few weeks.

VAT is a UK tax intrinsically linked to the EU. David Bennett, director of our VAT and TOMS Consultancy, Elman Wall Bennett comments:

“There’s huge uncertainty about how things will change in the next few years, but I don’t expect anything will happen quickly. Our VAT system as a whole is based on largely compulsory EU law and once we leave formally we cease to be bound by the EU rules. The UK might therefore decide to change the system but change would be a gradual process. Indeed, I suspect our system will not change hugely – it seems likely that the trade deal, which eventually will be agreed, will include a requirement that we continue to operate VAT along broadly EU lines (and that we will need to change our rules to reflect the changing EU scheme). VAT is an integral part of the single market so if we want to participate in the single market, then my understanding is that we will need to operate VAT in a way very similar to the EU model. In any case, I doubt anyone will have much desire to majorly overhaul the system.

For TOMS, the above all applies. More specifically, the EU law on TOMS is binding but we have our own domestic legislation to implement the EU rules. My understanding is that nothing will change while we negotiate terms with the EU and that will take a couple of years. Once we leave formally, we might agree to retain TOMS as part of the trade agreement. Even if we do not, the UK TOMS legislation remains in force until the government decides to repeal it.”

As you will have seen, currency markets are very volatile and no doubt affected businesses are talking to their FOREX advisors on their next steps and strategies if these weren’t already in place. If anyone needs guidance, we will happily introduce you to our friends at Moneycorp who can assist.

For all of our travel clients, both inbound and outbound, organisations like ABTA, ETOA and UKInbound have all released statements reiterating that it is business as normal . They also say that the UK needs to negotiate beneficial terms with European countries following Brexit that allows holidaymakers to continue to travel both ways between the UK and the rest of Europe. There will be masses of travel related aspects from Open Skies agreements to mobile data roaming charges to be taken into account.

Over the next few years, there will clearly be significant changes that will affect all of our businesses. Across the Elman Wall Group, we will be monitoring these changes and working with our clients to ensure that they plan for and understand any consequences of them. In the meantime, please contact us if you would like to discuss any concerns.